No-one Knows

There are lot of articles about what will happen to the markets and certain industries after the results of the US Presidential Election is known. The fact is, not one person knows with any certainty either: who will win or what the market reaction will be.

The market despises uncertainty, and right now the air of uncertainty in the markets is thick. Price action over the last several weeks has become more volatile and the message should be interpreted as a time to trim back on size and level of activity.

Successful traders seek an edge to exploit which will give them a slight advantage, often the advantage is to know when to sit on the sidelines and let the inmates run the asylum. Right now seems like the perfect time to take a step back, focus on specific low risk individual equity setups (for shorter term timeframes) and let others gamble about election outcomes with big market bets in either direction.

A strong defense alone cannot win the game in the market, but it does allow us to be objective and patiently wait for our edge to reveal itself to us.